What is the reason behind introducing a DAO governed by ERC-721 NFTs?
If you are an avid follower of the cryptocurrency market, odds are you have heard of “governance” tokens running a DAO (Decentralized Autonomous Organization). Over the past few years, many have viewed DAOs as a more efficient and fair approach to the governance of blockchain protocols. Based on open-source code, a DAO operates according to the smart contract without a centralised authority, and governance token holders will have the rights to vote on proposals related to the project’s future development. These governance tokens are often distributed to the community members and traded on cryptocurrency exchanges.
Following the DeFi craze
Every project introducing their version of governance tokens, NFT platforms began to jump on the hype train. We’ve seen NFT platforms marketing themselves as a community-owned NFT marketplace by allowing users to power their community-run platform model with ERC20 governance tokens.
However, this method is not without flaws. Although the term “community governance” looks promising on first glance, it is easier said than done. Hype based on price speculations, pump & dumps or even outright market manipulation is common for ERC20 governance tokens.
One of the most recent examples would be the flash loan manipulation on MakerDAO protocol back in October. By leveraging the flash loan process, Bprotocol used an uncollateralized loan to borrow roughly $7 million worth of MKR in order to influence a poll that will get them white-listed in order to access the MakerDAO’s price oracle. This incident has triggered questions about MakerDAO’s governance apparatus and forced the ecosystem participants to vote for a new approach to fight against another possible flash loan attack in the future.
Another common issue of ERC20 governance tokens
The Pump & Dump, with whales taking advantage of the market dynamics of supply and demand to make investors see the price movements as a normal trend. As more investors FOMO into buying the pump, whales with a significant holding of the ERC20 token will start selling, causing the price to crash. As a governance token, a sudden dip in price will cause investors to lose confidence in the project and creates an unsustainable ecosystem.
Two months ago, Sushiswap creator, Chef Nomi liquidated his share of $SUSHI and caused huge dumpage in the token price. ERC20 governance tokens indirectly incentivise and encourage founder early exits in their project due to the ease of swapping fungible tokens on exchanges. This will not be ideal for any project’s community members who trusted the platform’s vision.
World’s First DAO governed by ERC-721 NFTs
- Directly participate in Mintable’s future development and growth
- Say goodbye to Pump & Dump in the secondary market
- Buy/Sell the voting NFTs just like any NFTs
- Safer and Healthier Decentralised Governance
- Ability to add features that will further benefit voting NFT holders if voted upon.
- Voting power is tangible, just like a badge
- Gain more votes by trading on Mintable marketplace or via the bonding curve during launch.
While most platforms with an ERC20 governance token doesn’t have a live DAO contract and are doing quasi-voting without any smart contract, Mintable have an actual DAO smart contract. Not all dAPPs need an ERC-20 governance token. Let alone an NFT platform. It’s just a lazy effort to introduce decentralised governance. Mintable is different. We disagree with ERC-20. There is no way to divorce speculations from true governance with ERC-20 tokens.
So how do we allow DAO participants to benefit from all of the necessary benefits while eliminating the pain-point of using ERC-20 governance token? As Mintable V2.0 is set to launch on 30th November, we are on a mission to unite the benefits of DAO governance mechanics with the benefits of ERC-721 NFT tokens.
Mintable wants to be community-driven…
…decentralized, and flexible with our unique DAO. Instead of voting with the highly volatile ERC20 tokens, NFTs will be used on Mintable DAO. Every user will own a voting NFT that contains their voting power on it.
Mintable NFT DAO is owned and governed by the community from the outset with all participants starting on equal footing. Every vote is either earned from interacting on the platform, giving governance rights to the hands of active Mintable users. Another way of obtaining votes during launch will be directly buying the votes from the bonding curve. This will allow early adopters to start accumulating votes early and vote/propose on adding new features immediately after launch, without having to wait the long game of selling multiple NFTs.
Every time any transaction occurs on the Mintable marketplace — the buyer and seller both get votes added to their NFT, encouraging higher participation rate on the platform. Through votes, our community has the power to propose future implementations such as the ability to add yield farming/staking into the voting NFTs or add revenue earning possibilities from our smart contracts. Being part of Mintable’s DAO opens up various benefits and opportunities for NFT creators!
How $MINT Voting NFT Works?
Instead of taking the regular DAO approach of using ERC20 tokens as voting power, Mintable DAO relies on $MINT voting NFTs. Only 10 million votes will be made available. After all 10m votes are distributed/sold, it will only be available on the open NFT marketplace.
Each $MINT voting NFT acts as a unique wallet that store vote count. This votes will be used to vote on proposals on Mintable site. There is no minimum required amount to participate in the voting, however, a person who wants to propose a change to the protocol must have a minimum of 10,000 votes on hand. The votes will be locked during the voting period and unlocked after the proposal is approved/rejected. Voter won’t lose their votes. $MINT holders can sell their voting NFTs on open marketplaces just like any other NFTs!